Updated: Nokia told not to spend its golden years patent trolling

Handset business will sell to Microsoft, but keep its patents. Regulators noticed.

When Nokia completes the sale of its telephone business to Microsoft, a transfer of its substantial patent portfolio will be conspicuously absent from the deal. Microsoft got licenses to those patents but won't buy the patents themselves. That situation immediately led to speculation that Nokia was interested in doing standalone patent-licensing when it would be mostly immune to counterattack.

As Nokia's management must surely have been aware, creating businesses that do nothing but license patents has become controversial. Whatever Nokia does, it isn't just going to become the chatter of the Internet—in Europe, antitrust regulators are watching as well.

EU antitrust chief Joaquin Almunia said in a speech on Monday that Nokia had better think twice before trying to "extract higher returns" from its patents, according to an AP report. "In other words...behave like a patent troll, or to use a more polite phrase, a patent assertion entity."

Almunia will open an antitrust lawsuit against Nokia if the company tries to take "illegal advantage" of its patents, he said.

The kinds of licensing that would be illegal, in Almunia's view, appears to be a gray area. Nokia, unlike many real "patent trolls," has a history of licensing patents to competitors as a big operating company. Almunia may expect the company to stick to those rates.

Patent attacks by a different defunct telephone company got some serious attention last month. Rockstar Consortium, which continues to be owned by Microsoft, Apple, and Blackberry, sued Google over Nortel patents purchased at auction. It looks like Almunia doesn't want to see a situation like Rockstar pop up across the pond.

UPDATE: The AP report, which says Almunia "warned Nokia not to try to become a patent troll," reflects a different tone than the text of the speech. The relevant section reads:

Since Nokia will retain its patent portfolio, some have claimed that the sale of the unit would give the company the incentive to extract higher returns from this portfolio.

These claims fall outside the scope of our review. When we assess a merger, we look into the possible anti-competitive impact of the company resulting from it. We cannot consider what the seller will do.

If Nokia were to take illegal advantage of its patents in the future, we will open an antitrust case – but I sincerely hope we will not have to.

In other words, the claims we dismissed were that Nokia would be tempted to behave like a patent troll or – to use a more polite phrase – a patent assertion entity....

You can rest assured that we are watching this space very carefully. DG competition will hold patent trolls to the same standards as any other patent holder.

A Nokia spokesperson said the company will continue to honor its patent-licensing agreements, adding:

Nokia has a long-established licensing program for our standard-essential patents, with more than 50 licensees. In most cases the licenses were agreed amicably and no regulators have yet identified any issues with how we license our patents.

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

You don't understand the difference between how you want patents to work and how they acually work.

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

you realize that would incentivize bankrupting small inventors. A small company w a handful of business critical patents would be looked at like fresh meat from the rest of the world if all the competitors had to do was kill the company to get to use the patents for free. Would be funny to see MS funding some no name just to keep it alive if they had a patent screwing google though.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

A couple factors are unique to the US: the fact that there's (at least theoretically) a jury trial at the end of the road, and the high cost of litigation. Nearly 100% of pure patent assertion entities accept settlement payments that are below the cost of defending a case.

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

You don't understand the difference between how you want patents to work and how they acually work.

Please read the comment next time instead of just attacking me. I know that's not how patents work. And, as another user pointed out, they couldn't work that way. Just trying to say that I think patents as something that can be bought and sold is stupid.

Also, had a valid question in there that pertains to the thread. The down vote button is not be a disagree button.

When I read for the first time that Microsoft had purchased Nokia's phone division but only licensed its patents not purchased them, the first thing that came to mind was Nokia was about to become a very powerful Microsoft controlled patent troll.

Microsoft has already had its hand up Nokia's ass running its mouth for a long time, and Microsoft has a history of using patent trolls to do its bidding, to me this arrangement was exactly what Microsoft had in mind.

I'm not sure that Nokia could be considered a patent troll - even without the phone division they are still planning on developing technology related to routers and other things right? As a result, patents on that technology (including signal patents) would be based on technology they are actually using, deploying, and developing for the market.

I dislike - severely - our patent system, it badly needs to be overhauled, but I'm not sure Nokia falls as a troll yet, and I still like to believe that someone is innocent until guilty

Now that they have approved the purchase, after the deal is closed, Nokia can do anything they want.

If Nokia chooses to only license its patents to Microsoft that is their choice. If Nokia decides to stop anyone from using their patents without a license that is there choice.

Only a small minority ( if anye )of Nokia's patents are even FRAND partents. At the end of the day if they offer to license a FRAND patent to Microsoft they have to offer the same terms to everyone else.

This was pretty much what the Microsoft vs Motorola case proved.

* In that case Microsoft had used a license, and refused the offered terms, years later a judge decided that because the offered terms to Microsoft were not actually reasonable new terms would be decided. In the end while Microsoft was guility of using a FRAND patent without a license they paid a great deal less then what Motorola actually wanted in their original offer.

** This is not a percise explaination of what happen but its close enough.

To go full patent troll they would have to shut down or sell those divisions as well.

Nokia sold to Microsoft the Devices and Services division, which designs and manufactures mobile devices and provides mobile services. Included in the deal were the rights to use the Nokia brand for feature phones (but apparently not smartphones, i.e. the Lumia line) and licenses to all Nokia patents for 10 years. A substantial company still remains as Nokia Corporation, the major part being the cellular network manufacturer NSN. So saying that "Nokia sold itself to Microsoft" is sloppy reporting from Joe, even if an earlier article has the details right.

Nokia patents are on their own original inventions, not on somebody else's with some word salad added like Apple's or the generic patent troll "do [insert any 2000 year old business method] on the internet". Going after Nokia as a patent troll is ridiculous.

Nokia sold to Microsoft the Devices and Services division, which designs and manufactures mobile devices and provides mobile services.... saying that "Nokia sold itself to Microsoft" is sloppy reporting from Joe, even if an earlier article has the details right.

I could have written the first sentence in a way that was clearer and more accurate. I changed "completed the sale" to "completed the sale of its telephone business."

If you're going to call me sloppy on the details, it seems like it would be fair to ask you to be detail-oriented in your criticism. You're critiquing a sentence ("Nokia sold itself to Microsoft") that I never wrote.

Edit: Deck also changed from "telco" to "handset business," and tense changes throughout as the sale is not yet complete.

"Just trying to say that I think patents as something that can be bought and sold is stupid."

It has to be possible to sell patents, unless every inventor with a good idea also needs to own a factory in China to get the product produced. Then if that person dies with young dependent children, are they supposed to run the factory in China?

What must not happen is patents get wildly abused. I would say the same for copyrights, which unfortunately run much longer than the 17 year patents on technologies and medicines.

Let me just say that with the sad and untimely shuttering of GrokLaw, I really appreciate Ars digging into these issues and providing further analysis from a more balanced point of view than "Mr. FOSS Patents". Keep up the good work!

I'm not sure that Nokia could be considered a patent troll - even without the phone division they are still planning on developing technology related to routers and other things right? As a result, patents on that technology (including signal patents) would be based on technology they are actually using, deploying, and developing for the market.

I dislike - severely - our patent system, it badly needs to be overhauled, but I'm not sure Nokia falls as a troll yet, and I still like to believe that someone is innocent until guilty

While true, they're putting themselves in a position where they've got an entire division of the company that's not really good for anything except patent licensing. They may or may not "troll", but they sure could if they wanted to.

Nokia patents are on their own original inventions, not on somebody else's with some word salad added like Apple's or the generic patent troll "do [insert any 2000 year old business method] on the internet". Going after Nokia as a patent troll is ridiculous.

Word salad? Are you in fact qualified and/or sufficiently experienced to understand the inventions being described?

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

You don't understand the difference between how you want patents to work and how they acually work.

Please read the comment next time instead of just attacking me. I know that's not how patents work. And, as another user pointed out, they couldn't work that way. Just trying to say that I think patents as something that can be bought and sold is stupid.

Also, had a valid question in there that pertains to the thread. The down vote button is not be a disagree button.

Even if they were to do nothing but assert their existing patents I don't think Nokia could be considered a patent troll in the same league as some others we have read stories about.

The technologies that they have patents on where developed with the intent of going into products. Its not like they just bought up a bunch of patents with the sole purpose of litigating. Even though it may now be their intent to assert their patent rights and extract licensing fees does it make them a troll?

I suppose it depends in their methods.

Are Apple, Google and Microsoft not trolls just because they have product in the market? I'm sure their litigation and assertion of patents is just as vigorous as any so called troll.

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

...

.... Just trying to say that I think patents as something that can be bought and sold is stupid. ...

While a patent is related to an invention, it is not the invention itself. Patents are just temporary property rights that are granted by a government. In the U.S., they are granted in exchange for "disclosing" (theoretically) novel and non-obvious inventions to the public. The purpose of this exchange is to encourage people to take on the economic risk of spending their time and resources to attempt to invent something new and then telling the rest of us about it with no guarantee of a return on that investment.

All property rights are fundamentally "exclusionary" - if you own land you don't so much have the right to occupy the land yourself as you have the right to exclude other people from being there, according to whatever criteria you see fit (and subject to the limitations imposed by whoever granted you the property right in the first place). Similarly, when you sell a piece of property you're not selling the property itself; you're selling your rights in that property.

When you own property, you essentially control the supply of that property to the market. If other people like your property, it can create an economic demand for access to it. On the other hand, if your property sucks and no one really wants to visit it, then your control of the supply is moot and the property is economically worthless. Either way, the value of a given piece of property is fundamentally tied to (1) the degree to which people want to use it (demand) and (2) the degree to which such use is limited (supply).

A patent acts the same way. It only has value because you can make people pay for the privilege of using your property. Aside from that, a patent is worthless.

With all that in mind, I disagree that it is "stupid" that patent rights can be bought and sold. For one, you never explain what you think the actual problem is. Moreover, I think the ability to transfer your patent rights to another in exchange for something you want more than your patent rights is a fundamental part of what motivates people to participate in the process.

I also think that in your proposed system of allowing a patentee to license their rights to others while preventing them from selling their rights outright is fundamentally flawed because the ability to license the patent (or just sell the company that owns the patent instead of the patent itself) would completely defeat any gain you might get from preventing their sale in the first place: So I can't sell Patent Troll, Inc. my patent that purports to cover using a website to look up an answer to a question, but I can just sell them my company or grant them a lifetime, irrevocable and exclusive license in exchange for a large upfront license payment? Six of one, half a dozen of the other.

"If Nokia were to take illegal advantage of its patents in the future, we will open an antitrust case – but I sincerely hope we will not have to."

This is largely meaningless posturing. There are a few things Nokia could do that might be illegal. Perhaps charging very different rates especially for FRAND patents, or refusing to license. But common patent trolling is legal.

In other words, "please don't become a patent troll, because it's obvious we haven't the slightest idea how to control patent trolling, and it will just make us look even worse."

I'm pretty torn on this, because patent trolling is bad, but the worse things look for regulators, the more likely someone will try to actually solve the problem.

"If Nokia were to take illegal advantage of its patents in the future, we will open an antitrust case – but I sincerely hope we will not have to."

This is largely meaningless posturing. There are a few things Nokia could do that might be illegal. Perhaps charging very different rates especially for FRAND patents, or refusing to license. But common patent trolling is legal.

In other words, "please don't become a patent troll, because it's obvious we haven't the slightest idea how to control patent trolling, and it will just make us look even worse."

I'm pretty torn on this, because patent trolling is bad, but the worse things look for regulators, the more likely someone will try to actually solve the problem.

That may be the case in the US (sadly), but EU anti-trust laws are a completely different beast. You may notice that the vast majority of patent trolls sue in the US and nowhere else.

That may be the case in the US (sadly), but EU anti-trust laws are a completely different beast. You may notice that the vast majority of patent trolls sue in the US and nowhere else.

You don't have as many stupid people in Europe as in Marshall Texas. Also, in most jury trials in US you are trying to convince a jury composed of people that would have a problem SPELLING the word patent, yet alone understanding anything about it.

I've always thought of a patent troll as a company who primarily buys patents with the sole purpose to go and extort money.

Nokia is of course completely different to this in that they spend billions in R&D developing new ideas and protecting them through the patent process. Therefore I feel they are completely justified in getting a return on that investment and are far from a 'patent troll' whether they sell handsets today or tomorrow.

I'm not sure that Nokia could be considered a patent troll - even without the phone division they are still planning on developing technology related to routers and other things right? As a result, patents on that technology (including signal patents) would be based on technology they are actually using, deploying, and developing for the market.

I dislike - severely - our patent system, it badly needs to be overhauled, but I'm not sure Nokia falls as a troll yet, and I still like to believe that someone is innocent until guilty

I think it's a major error to focus so narrowly on whether an entity "practices" or not.

An army that wages war against it's own citizenry is still objectionable, regardless of whether it engages in action against a foreign foe. A doctor that sells drugs to children wouldn't excused because they provide legitimate prescriptions to patients. And so on... Why should "Practising Entities" be judged on different principles?

Obviously Nokia is going to get more money from its patents in the future as they no longer need to cross-license anything. There's nothing illegal about it. Nokia poured more money into R&D than their 3 biggest competitors combined for 10-15 years in a row. They're well within their rights to make money from it.

I'm not sure that Nokia could be considered a patent troll - even without the phone division they are still planning on developing technology related to routers and other things right? As a result, patents on that technology (including signal patents) would be based on technology they are actually using, deploying, and developing for the market.

I dislike - severely - our patent system, it badly needs to be overhauled, but I'm not sure Nokia falls as a troll yet, and I still like to believe that someone is innocent until guilty

I think it's a major error to focus so narrowly on whether an entity "practices" or not.

An army that wages war against it's own citizenry is still objectionable, regardless of whether it engages in action against a foreign foe. A doctor that sells drugs to children wouldn't excused because they provide legitimate prescriptions to patients. And so on... Why should "Practising Entities" be judged on different principles?

This is a fair response, and I'm going to give an answer that might not settle well, but is my honest belief:

Degrees of difference.

When an army wages war against it's own citizenry it is a fundamental breakdown of everything that the civilization in question built. This is the total rending of both the government and the social contract that formally united the group. That isn't happening here. Individual actors are taking actions which undermine a small component of our overall social fabric, and which can be repaired through additional social actions within the current framework of social contracts (i.e. passing legislation).

Additionally, I value human life a lot more than I value patent disputes one way or the other - I can live without a cell phone, I can't live with a M1A1 blasting depleted uranium slugs into my apartment building.

The doctor selling drugs to children was a much better counter argument. However, the pattern of damages is wrong. The doctor is selling drugs to children, it would have been better to say the doctor is extorting patients for care that other doctors are giving. For example, blocking the door to the emergency room until a door opening fee is paid (much like how HMOs work for example!).

Again, however, we need doctors because I can live without a cell phone, but I can't live if cancer eats me.

So it is a matter of degrees. As I said, I agree the system is completely broken. I'm also not entirely sure how you can patent math, but that is a tired tired argument which our courts gleefully like to reject because they seem to have a deep love for general ignorance.

At the same time, I'm not trying to take out a tank with a home made rocket launcher, so I'm good.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

A couple factors are unique to the US: the fact that there's (at least theoretically) a jury trial at the end of the road, and the high cost of litigation. Nearly 100% of pure patent assertion entities accept settlement payments that are below the cost of defending a case.

Jury trial in these cases is not common in Europe.It's easier to get the losing party to pay for the winner's legal expenses, especially for a frivolous suit.When the plaintiff is obviously a shell company, provisionning expenses with a trustee may be imposed.

I'm not sure it's accurate to characterize Rockstar Consortium as a "patent troll". A "patent assertion entity" it surely is, but the partners involved all actually "make stuff". A lot of stuff in fact.

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

You don't understand the difference between how you want patents to work and how they acually work.

Please read the comment next time instead of just attacking me. I know that's not how patents work. And, as another user pointed out, they couldn't work that way. Just trying to say that I think patents as something that can be bought and sold is stupid.

Also, had a valid question in there that pertains to the thread. The down vote button is not be a disagree button.

I have to agree with the piece I bolded in this quote. I noticed his original post get many downvotes that I can only assume are attributed to not liking or agreeing with his post. Is the intent of the voting system to be an agree/disagree vote? When did the Ars forum become a popularity contest? Up/Down votes should be for relevancy, factual correctness, and to weed out trolls.

Now, proceed to downvote my post since it is clearly off-topic to the article at hand, not simply because "waaaa i don't like it".

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

You don't understand the difference between how you want patents to work and how they acually work.

Please read the comment next time instead of just attacking me. I know that's not how patents work. And, as another user pointed out, they couldn't work that way. Just trying to say that I think patents as something that can be bought and sold is stupid.

Also, had a valid question in there that pertains to the thread. The down vote button is not be a disagree button.

I have to agree with the piece I bolded in this quote. I noticed his original post get many downvotes that I can only assume are attributed to not liking or agreeing with his post. Is the intent of the voting system to be an agree/disagree vote? When did the Ars forum become a popularity contest? Up/Down votes should be for relevancy, factual correctness, and to weed out trolls.

Now, proceed to downvote my post since it is clearly off-topic to the article at hand, not simply because "waaaa i don't like it".

Unfortunately, it does in fact serve double duty (and in fact, some clearly do see it as an "I agree/I disagree" button.

It becomes something of a balancing act; I myself do down-vote posts that I disagree with -- but I am also likely to up-vote a post despite disagreeing, if I feel it has been a constructive contribution to the discussion, either laying out a sensible argument or perhaps even just informative. Posts I "agree" with, but consider for some reason to be "bad" I will often ignore, or maybe even down-vote if I consider it "detrimental" to the discussion. I suppose this means that my degree of agreement biases my voting somewhat -- but I do keep that bias under control.

- - - - - - -

I personally would like to see the voting system be 2-dimensional: one could vote separately on quality (up -- good / down -- poor) and agreement (left--disagree / right--agree)

It might even be possible (ie. practical) to display the result as some sort of compass or "magic grid":so the "north-east" quadrant iwould show that posts were adjudged as both "agreed" and "good", the "north-west" quadrant indicating that the post was judged "wrong -- but reasonable/constructive/well-argued", "south-west" would be the province of garbage posts and trolling. Due North would show that people thought the post was good, whether or not they agreed (or perhaps haven't decided), etc.

And of course, readers would be able to vote on only one dimension (yes/no or good/bad). So they could, for example, vote a post as "high quality" without having to decide whether they were persuaded to one side or the other.

I just don't get how patents can be bought and sold. A patent comes from an invention of a guy or a company. Company dissolves, then oops, patent is now freely licensed. It can stick with an individual, who can license it if he so chooses, until he passes. Then it becomes "open source," for lack of a better term.

More on topic, how bad are "patent assertion entities" in Europe? I hear about the American ones all the time, but I'm having trouble thinking of even one story about a Euro-troll.

You don't understand the difference between how you want patents to work and how they acually work.

Please read the comment next time instead of just attacking me. I know that's not how patents work. And, as another user pointed out, they couldn't work that way. Just trying to say that I think patents as something that can be bought and sold is stupid.

Also, had a valid question in there that pertains to the thread. The down vote button is not be a disagree button.

I have to agree with the piece I bolded in this quote. I noticed his original post get many downvotes that I can only assume are attributed to not liking or agreeing with his post. Is the intent of the voting system to be an agree/disagree vote? When did the Ars forum become a popularity contest? Up/Down votes should be for relevancy, factual correctness, and to weed out trolls.

Now, proceed to downvote my post since it is clearly off-topic to the article at hand, not simply because "waaaa i don't like it".

Unfortunately, it does in fact serve double duty (and in fact, some clearly do see it as an "I agree/I disagree" button.

It becomes something of a balancing act; I myself do down-vote posts that I disagree with -- but I am also likely to up-vote a post despite disagreeing, if I feel it has been a constructive contribution to the discussion, either laying out a sensible argument or perhaps even just informative. Posts I "agree" with, but consider for some reason to be "bad" I will often ignore, or maybe even down-vote if I consider it "detrimental" to the discussion. I suppose this means that my degree of agreement biases my voting somewhat -- but I do keep that bias under control.

- - - - - - -

I personally would like to see the voting system be 2-dimensional: one could vote separately on quality (up -- good / down -- poor) and agreement (left--disagree / right--agree)

It might even be possible (ie. practical) to display the result as some sort of compass or "magic grid":so the "north-east" quadrant iwould show that posts were adjudged as both "agreed" and "good", the "north-west" quadrant indicating that the post was judged "wrong -- but reasonable/constructive/well-argued", "south-west" would be the province of garbage posts and trolling. Due North would show that people thought the post was good, whether or not they agreed (or perhaps haven't decided), etc.

And of course, readers would be able to vote on only one dimension (yes/no or good/bad). So they could, for example, vote a post as "high quality" without having to decide whether they were persuaded to one side or the other.

Indeed, study of basic human nature - or 5 minutes in a discussion thread on this forum - shows you that the idea of "just downvote/upvote a post based on its merits" is a delusional idea.

I'm not sure we actually need a 2d quality system, just a "this post is of low quality and doesn't contribute anything to the discussion" would be fine by me.

Yes I know in theory the idea of a "I agree/disagree" button is not something we'd want to have, but in practice it's the only way I see to implement the quality control system we want in a reasonable manner and not gigantic amounts of false-positives. Also I think as soon as you allow to vote on two things at the same time you'll end up with exactly the same situation, most things would just be on the extremes of the diagonal then - don't tempt human nature.

Not sure who the right contact person/what the right forum for such a discussion would be though, but the current system really has its flaws.